PROCUREMENT POLICY MBDA GERMANY Content 1. Preamble and purpose of the Policy 4 2. Introduction of MBDA 4 2.1 MBDA Group 4 2.2 MBDA Germany 5 3. Procurement Strategy 6 4. Procurement Principles 7 5. Quality Requirements and Regulations 8 5.1 Quality Certifications 8 3 5.2 Export Control Regulations 8 5.3 Environmental Regulations 8 6. Procurement Practices 9 6.1 Supplier Selection 9 6.2 Supplier Base Categorisation 10 6.3 Supplier Evaluation and Development 10 6.4 Preferred Suppliers 10 6.5 Risk and Opportunity Sharing 11 6.6 e-Procurement 11 1. Preamble and purpose of the Policy MBDA Germany (hereafter also referred to as MBDA-GE) commits itself to deliver out - standing products and services to its current and future customers along the entire pro - duct life cycle. Therefore, MBDA-GE sets high standards not only for its own business, but also for each stakeholder within the entire Supply Chain. In alignment with MBDA-GE’s strategic procurement goals, we aim to purchase high quality products and services at best prices within requested delivery times. Additionally, there are legal, ethical, procedural and environmental requirements we and therefore also our suppliers have to meet. 37.5% 37.5% 25% This Procurement Policy is intended to inform current and potential suppliers about the business environment and requirements to be met as prerequisite for partnering 4 with MBDA-GE. 100% 100% We encourage you to keep in mind this procurement policy and to contact MBDA-GE Procurement Office in case you require any clarification or further information. MBDA Spain MBDA USA 100% 100% 2. Introduction of MBDA MBDA France, MBDA Italy MBDA Germany 2.1 MBDA Group MBDA UK integrated organisation MBDA, a world leader in missiles and missile systems, is a multi-national group with over 10,000 employees in France, the United Kingdom, Italy, Germany, Spain and the United States. MBDA has three major aeronautical and defence shareholders - BAE Systems, EADS and Finmeccanica - and is the first truly integrated European defence company. MBDA is the only group capable of designing and producing missiles and missile systems to meet the whole range of current and future operational requirements for the three armed forces (army, navy, air force). Altogether, the Group offers a range of 45 products in service and another 15 in development. MBDA coopera - tes with over 90 armed forces worldwide and is prime contractor for a series of strategic multi-national programmes such as Storm Shadow/SCALP, TAURUS, Aster, Meteor, Milan or MEADS. 2.2 MBDA Germany In 2006, MBDA Group acquired Germany’s No. 1 guided MBDA Germany missile systems house, MBDA Deutschland GmbH (formerly called LFK-Lenkflugkörpersysteme GmbH) and its subsidiaries, and with that consolidated the Group’s world-leading position MBDA Deutschland GmbH in the industry. Systems House for Effective Engagement Together with its associated subsidiaries, partners and subcon - tractors, MBDA-GE develops and produces Air Defence Systems, Stand-Off Missile Systems and Battlefield Engagement Systems. TDW GmbH Bayern Chemie GmbH MBDA-GE has 1,300 employees in Schrobenhausen, Unterschleiß - 5 100% 100% heim, Ulm and Aschau, generating sales of approx. 500 M € per Centre of Competence Centre of Competence year. for Warhead Systems for Missile Propulsion MBDA-GE’s Procurement Division is divided into three specialist euroMEADS COMLOG RAM-System PARSYS SysFla EUROMISSILE departments: GLVS mbH TSG mbH GmbH* GmbH GmbH GmbH GmbH G.I.E. * holds 50% of MEADS International Supply Chain Management Subcontractor Commodities & Supply Chain Management Material Management Strategy & Methods Whereas our Subcontractor Management is responsible for all activities with suppliers that provide high-value, complex, customised or strategic products and services, our Commodities department procures mainly standardized goods as well as indirect supplies and services. With the support from Strategy & Methods, the MBDA-GE Supply Chain Management organisation is able to provide the company with products and services that are on- time, on-cost and on-quality. 3. Procurement Strategy MBDA-GE’s Procurement Strategy sets out a clear framework in order to support our business and overall company strategy MBDA-GE company targets Supply Chain Management contribution: Fulfil specific demands with regard to individual requirements on time, cost and quality Satisfy the internal customers current and future demands Establish and maintain sustainable process and tool landscape Minimise risks by proactive management of a capable supplier base l o 6 r t n o C d Strategic Key Performance n Actions a Procurement Goals Indicators n o i t L Parameters a c A i Efficient supplier management N n I I Supplier performance R Qualified supplier selection u E I m T Pro-active Risk management Quantitative I Inter- and intra-functional X m I Sustainable supplier development E measurement where o organisation C possible, qualitative measurement where I Employees L Process optimisation A reasonable I Internal customers N I Continuous benchmarking R E I Early engagement of all I Tools and processes T N stakeholders I Compliance with Procurement Policy We are convinced that a good business relationship is based on mutual trust and therefore we aim for long-term partnerships with the best suppliers. 4. Procurement Principles • MBDA-GE Ethical Principles • Global Sourcing Successfully doing business and responsible behaviour MBDA-GE procures worldwide in order to find suppliers in society is not a contradiction for us nor should it be delivering best performance in quality, experience and for our suppliers. Fairness, transparency, accountability delivery targets. In terms of costs, we look at the Total and sustainability are values that we expect our suppliers Cost of Ownership rather than list prices. to adhere to as MBDA-GE does itself. • ‘One Face to the Supplier’ • Commitment to Competition The Procurement department is involved in all activities Value for money is best achieved by competition. In order to with MBDA-GE’s suppliers, thereby ensuring trans - ensure competition among its suppliers, MBDA-GE continuously parency and legal compliance. analyses the market and requests tenders from various compa - nies. 7 • Industrial Co-Operation and Offset As it is often required to fulfil Offset obligations (compensation agreements) by foreign customers, MBDA-GE strives to use business done with its suppliers as much as possible to comply with these re - quirements. Therefore, it is important that suppliers inform us about the workshare they can tender in MBDA-GE Offset countries on the basis of activities generated by themselves, their subsidiaries or even subcontractors. 5. Quality Requirements and Regulations 5.1 Quality Certifications Depending on the product or service procured, MBDA-GE may request the following key quality certifications from its suppliers: • DIN EN 9100 • ISO 9001 • AQAP (Allied Quality Assurance Public ations) MBDA-GE or its customers may require audits at the supplier’s premises. The supplier 8 is expected to support all audits. 5.2 Export Control Regulations As MBDA-GE is a defence company, we and our suppliers are obliged to comply with national and international export control regulations, in particular with the US Inter - national Traffic in Arms Regulations (ITAR). Every supplier is required to support MBDA-GE and its customers in fulfilling all export control requirements, e.g. by providing all relevant export control information and documentation. Therefore, the supplier receives an export control questionnaire for materials intended to be supplied to us. 5.3 Environmental Regulations MBDA-GE is committed to protect the environment and therefore requires that suppliers work in a way such that the impact on the environment and consumption of resources is minimised. All suppliers are obliged to comply with the European REACH regulation and provide MBDA-GE with the relevant required information. Suppliers should have or be in the process of developing an Environmental Management System in accordance with the requirements of ISO 14001. 6. Procurement Practices 6.1 Supplier Selection If necessary, MBDA-GE issues a Request for Information (RFI) to potential suppliers. Responses are analysed and tested with regard to our requirements. Based on the re - sults, qualified suppliers are asked to respond to a Request for Proposal (RfP), which will finally be negotiated with the selected candidate. Suppliers have to fulfil certain criteria in order to be selected as provider for goods or services. The most important criteria for the supplier selection are: 9 • Product portfolio, variety, technology and information provided by the supplier through Request for Information or supplier questionnaire • Capability of the supplier to fulfil expectations regarding quality, cost, technology, logistics, customer service and business behaviour • Relevant certifications and legal obligations, such as: - EN ISO 9001 - DIN EN 9100 - AQAP - REACH - RoHS - ITAR - AEO • Experiences on Shareholder or Group level • The supplier’s ability to support us in our offset obligations • Social and environmental governance • Willingness of the supplier to accept our Terms and Conditions of Purchase 6.2 Supplier Base Categorisation It is a systematic and long-term approach to drive supplier S t performance towards excellence. MBDA-GE classifies its suppliers into following ra te categories based on their impact on business: l g e ic v e K L e Excellent Outstanding Performance